The Heritage Foundation

Executive Summary #1341es on Health Care

January 7, 2000

January 7, 2000 | Executive Summary on Health Care

Executive Summary: Principled Mental Health System Reform

An estimated 5.6 million Americans suffer from severe mental illness. It strikes without regard to age, gender, race, education, socioeconomic status, culture, or ideology. In many cases it brings suffering not only to the individual but also to family and friends. Depression, which causes many of the 30,000 suicides in America each year, especially targets the elderly. Schizophrenia tragically afflicts some of America's best and brightest adolescents. Persons with mental illness deserve compassionate support, but are often met with fear and stigma. They need effective treatment, but are too often offered ineffective care, if any at all.

The economic costs of mental illness are staggering. America spends over $69 billion yearly on direct treatment costs. Virginia is a case in point: It spends over $1 billion for publicly funded psychiatric care each year; per-bed-year costs of hospitalization run between $108,000 and $175,000. Yet there are long waiting lists for community services, and many persons with severe mental illness are caught in a vicious circle. They enter a psychiatric hospital for treatment, are discharged back to their home community with no effective follow-up care, and end up homeless or back in the hospital. In addition, it is not unusual for those with private insurance to end up in public care once their limited coverage is exhausted.

Current mental health policy tends to support the status quo system regardless of the effectiveness of services, wasting precious resources that could be redirected to help those who are not receiving needed care. Worse, current policies doom many persons with mental illness, the self-termed "survivors" of the defective service system, to lives of marginal functionality and dependency when, with effective treatment and more compassionate care, they would be capable of productive independent living.

This must not continue. America has the compassion, resources, and treatments to care effectively for its citizens who suffer from severe mental illness. Federal and state policymakers must make comprehensive reforms in mental health care that are based on seven key principles: treatment quality, treatment access, consumer choice, personal independence and productivity, self- and family participation, provider accountability, and government responsibility for treatments that improve the quality of life for persons with mental illness. A system based on these principles would enable individuals and their families to manage the challenges and weather the heartbreaks of mental illness much more effectively.

The steps the federal government should take to implement this system are:

  • Block grant Medicaid to the states and remove Medicaid restrictions so states have the flexibility they need to pilot new programs and fund mental health system reforms.

  • Encourage greater creativity with federal funds that are not block granted and reward pilot programs that lead to improvements in the quality of care.

  • Coordinate the many federal agencies that are involved with mental health to overcome their fragmentation and to refocus them on system reform.

  • Develop standardized measures of performance and outcomes for providers so states can develop more effective forms of treatment based on actual results.

  • Increase funding for developing new mental health treatments, and for testing treatment effectiveness with standardized measures, so that policymakers will have scientific data on which to base their decisions.

  • Define severe and persistent mental illness so that resources can be focused on those with severe needs on a priority basis.

  • Change the tax structure for health insurance to allow tax deductions for the cost of employee-owned portable insurance in order to maximize coverage options and choice.

At the same time, the states should:

  • Close unneeded psychiatric facilities and retrain staff for community service.

  • Fund new community services with the savings achieved from facility closures.

  • Hold mental health providers accountable using standardized outcome measures.

  • Break the state monopoly on public mental health services.

  • Evaluate prevention and early intervention programs and offer their services to parents, schools, families, providers, hospitals, and the community.

  • Promote comparable insurance coverage for physical and mental health benefits.

  • Establish safeguarded outpatient commitment as an alternative to homelessness or hospitalization.

Reforms that incorporate these recommendations would ensure America develops a comprehensive mental health care system that truly meets the needs of persons with mental illness, providing compassionate and effective treatment and helping many return to productive lives. Federal and state policymakers must resist the temptation to make only slight modifications to the status quo and declare victory. The current system is broken and can only be fixed with far-reaching reforms that will not come easily.

It is not compassionate to fund failure. Principled mental health reform calls for raising expectations, measuring progress, rooting out failures, and insisting that America can do better for these, its most vulnerable citizens. America has the resources, compassion, and effective treatments necessary to make this happen, and the time to act is now.

Timothy A. Kelly, Ph.D., a licensed clinical psychologist, is a Visiting Research Fellow at the George Mason University Institute of Public Policy. From 1994 to 1997, he was the Commissioner of Virginia's Department of Mental Health, Mental Retardation, and Substance Abuse Services.

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